Despite the threat of increasing incidents of cyber attacks on businesses worldwide, the vast majority of companies (73 percent) report they do not have network liability policies, according to a new industry survey.

The survey, conducted by Towers Watson, says that of the businesses without cyber liability coverage, 37 percent reported their own internal information technology (IT) departments and controls are adequate, while 15 percent either said the cost of a risk transfer solution is prohibitive, or that they aren’t overly concerned about the risk.

“I think we’re seeing a lot of companies in the market right now that have a false sense of security and an overreliance on their own IT organization,” said Larry Racioppo of the executive liability group in Towers Watson’s Brokerage business. “Risk managers need to take a broader look at how they can manage the risks associated with cyber attacks from a corporate, financial and reputational standpoint.”

Of the 27 percent that have purchased network liability policies, the majority (61 percent) bought $10 million to $49.9 million limits; only 8 percent purchased $50 million or more. The median amount purchased was $10 million. While there was a wide range of reasons for how they arrived at the particular limit purchased, 36 percent said the limit was proposed by their broker, while 15 percent said they reviewed the level of the exposure with a third-party cyber risk management firm.

“Technology changes at such a rapid pace, there are new risks – potentially more damaging risks – that will undoubtedly occur, and companies have to continue to find better ways to manage and mitigate those risks, and make sure that they do all they can should they become exposed to a particular threat,” Racioppo said. To read the rest of the article, click here.